Swedish cryptocurrency could be coming soon, but cash is still needed: Riksbank boss

In a wide-ranging new interview with newspaper Sydsvenskan, Ingves touched on Sweden’s housing crisis, the trend of cafes and shops in the country refusing to take cash over card payments, and the feasibility of a national cryptocurrency, the e-krona.

“350 years ago we replaced large copper coins with notes. Notes could now be replaced with electronic notes and coins,” the Riksbank governor told Sydsvenskan.

The Riksbank could in principle release an electronic hundred kronor note, he explained, but digital currency would not need to be divided the same way as physical notes are.

“We’re thinking about it. But if you’re releasing electronic money it can be divided in a different way than notes. We wouldn’t use an electronic 100 kronor note if we’re buying something for 98 kronor. Nor would we use two kronor in electronic change. It would work just as well with a 98 kronor note.”

Currently being looked into by the Riksbank, an e-krona is “around three to four years” in the future according to Ingves, but would not entirely replace physical cash as that would create a problem in times of crisis.

“If the power supply is cut it’s no longer possible to make electronic payments. For reasons based purely in preparedness we need notes and coins that work without electricity,” he told Sydsvenskan.

And Sweden’s banks should always be expected to handle physical cash, in his opinion.

“It’s reasonable for banks to be expected to handle money. You should be able to deposit money in the form of notes. You should be able to take out money. A ban on cash goes against the public perception of what money is and what banks do.”

Ingves thinks banks would rather not have to deal with cash because it costs them money, which is why “this has to be a question for the law”.

When it comes to one of Sweden’s other big economic concerns – the housing crisis – he insists that change is needed.

“I don’t see a bubble, but the housing market has been working poorly for a long time. It’s a societal problem, a risk for the Swedish economy. When housing prices increase, households can only deal with it in the short term by borrowing more and more.”

With more than 250,000 households in the country borrowing more than six times their disposable income, the Swedish amortization requirements introduced in recent years are a necessity according the Riksbank head, but access to the right kind of property also needs to improve.

“The supply also has to be different. There seems to be an over supply of luxurious bostadsrätter (housing cooperative memberships that are a common form of home ownership in Sweden) when we need more cheap bostadsrätter – and far more cheap rental properties,” he told Sydsvenskan.

“It could become a national economic concern. If people can’t move to where the jobs are because they lack housing at a feasible price, it becomes a problem for everyone,” Ingves warned.